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IEA says supply of oil loosened last quarter

The oil market showed “slight loosening” last quarter though it’s too early to be sure that supply conditions have improved, according to the International Energy Agency while the Organization of the Petroleum Exporting Countries is “not happy” with high prices.

The IEA, an adviser to 28 industrialized nations that has at times coordinated the release of emergency stockpiles, is ready to act again if a major disruption occurs, IEA Executive Director Maria van der Hoeven said at a conference in Paris.

“You can only use a bullet once,” she said at the International Oil Summit in Paris on Thursday, referring to the use of emergency stockpiles. “We are particularly concerned about the high level of supply outages.”

IEA member countries released 60 million barrels of crude and oil products last June after Libyan output was disrupted. Brent crude prices peaked last year at about $127 a barrel in mid-April and briefly fell below $105 in late June. Oil traded at $117.58 in London on Thursday, down 62 cents.

OPEC Secretary-General Abdalla el-Badri said at the same conference that there is no shortage of oil in the market, and that the organization is “not happy” with current high oil prices, which may lead to demand destruction.

OPEC produces about 40 percent of the world’s oil and at its last ministerial meeting agreed on a new group-wide output ceiling, or quota, of 30 million barrels a day, which includes Iraq and Libya.

Supply outages

Supply outages in Syria, South Sudan, Yemen and the North Sea have had “minimal effect on the market” and have been offset by production increases in Libya, and stockpiles in industrialized nations are at a “healthy level” and trending higher, el-Badri said. There is enough supply to meet demand, he said.

Still, current prices are not being driven by fundamental elements of supply and demand, he said, blaming a “fear factor” of possible future shortages and speculation for part of the increase.

OPEC is exceeding its group quota and is “working hard to bring the price down”, El-Badri said. OPEC nations are currently producing 32.3 million barrels a day, he told a group of reporters at the Paris conference. An international price nearer $100 a barrel is comfortable for producers and consumers, he said.

Bank of America Corp said in a research report dated Wednesday that spot Brent crude prices will probably continue to exceed $100 a barrel for the next five years in order to keep demand in check.